What's next for Fortegra?

Rick Kahlbaugh [00:00:00] Administrative work does not add value for our shareholders, but high-quality underwriting does. 

Paul Lucas [00:00:06] Hello everyone, welcome to Insurance Business TV as we look into a highly significant deal in the insurance market with the man behind it all. Back in May, Fortegra’s acquisition by DB Insurance made waves in the market, and here to talk us through it all is Rick Kahlbaugh, who is Fortegra’s Chairman and CEO. Rick, welcome to Insurance Business TV. 

Rick Kahlbaugh [00:00:28] Thanks, Paul. Happy to be here. 

Paul Lucas [00:00:30] So as I mentioned, Rick, Fortegra’s acquisition by DB Insurance closed on May 29th, 2026, marking the first acquisition of a US insurer by a Korean non-life carrier. Why is that transaction a win for both companies? And indeed, what changes for Fortegra’s partners and customers going forward? 

Rick Kahlbaugh [00:00:50] Well, let’s unpack that one at a time because there’s a couple of points there that are important to make for the viewers and those people listening. The first is, why is it important for Fortegra? Fortegra has experienced tremendous growth. It’s broadened its geographic reach across into Europe and the United Kingdom and has been growing at a rather handsome pace. And as always with insurance, it’s a function of capital. And we explored many different avenues to support the business and our growth. And this one just seemed to be quite appealing, which transitions to the second point is why was this important for DB? They had the capital, but they wanted a much broader geographic presence. They wanted to enter the United States. They weren’t necessarily looking to enter Europe, but when they did the diligence on Fortegra, they saw it as quite an attractive opportunity to enter the European market and the UK market as well. So for DB, it gave them the platform to become a global enterprise with one transaction. For Fortegra, it provided us with the capital breadth to continue to expand our reach and continue to grow the business. 

Paul Lucas [00:02:22] Okay, and speaking of growth, Rick, of course we’re in something of a softening market perhaps. How is Fortegra preparing for growth in that market? 

Rick Kahlbaugh [00:02:31] Well, I think there are— continue to be opportunities, Paul. It— I would describe the market as spotty. There are still high-quality agents that are producing quality business that is attractive to us, but there’s no doubt you have to be quite cautious, a little bit more circumspect and measured about what risks you’re willing to entertain at what price. But I do believe there are still opportunities. We are focused almost entirely on niche business. The reason for that is it tends to not experience quite the dramatic swings when the market hardens or softens. It tends to be more steady, if you will. 

Paul Lucas [00:03:23] Let me zoom in on that a little bit more, if you don’t mind. You mentioned the fact that you’re You’re focused a little bit on that sort of niche business, and that’s perfect, of course, for the program business, the MGA market. So what does Fortegra see on the horizon in that area? 

Rick Kahlbaugh [00:03:38] I think we are dedicated to the program space. We like it. And I think the first question that arises is why. And the reason why is what we saw was a transition in the paradigm, the basic paradigm, which was risks are morphing at such an incredible pace from one risk to another that it requires a highly specialized underwriting approach. And we believe that the delegated authority agents have a knowledge advantage in a particular niche or a particular corridor of expertise. And we want to leverage that expertise rather than trying to build this ubiquitous underwriting staff to have knowledge not just in GL, but in all the various applications of GL. That would be impossible. So we look to partner with those highly skilled underwriters that have left carriers formed MGAs because they have some degree of knowledge in a particular specialized application of rather common policies, but it’s the application, Paul, that makes all the difference. For example, we do a lot of free trimmers over power law. Now, I don’t know how long you would think it would take to find Those retail brokers who represent those tree trimmers over power lines in California and the West Coast, it would take a long time. But we found the one agent, MGA, who knows the space, was in the space as an active tree trimmer, and then to solve his risk management problems, formed an agency. And then saw the virtues of building out a much broader application to his agency and solving the risk management problems for other large, similarly situated businesses. And that’s fairly common. We find that over and over and over again, especially in a very complex economy like the United States and Europe. 

Paul Lucas [00:06:03] I love how the fact that you’re bringing up that sort of reliance on the retail broker and then looking for those sort of unique niches, of course, where Having a lot of speculation, aren’t we, that the market is moving away from that with the increasing use of AI and the emphasis on technology. What do you think it means for the industry? 

Rick Kahlbaugh [00:06:20] Well, I think a couple things. Number one, AI is— there’s no doubt it’s a very powerful technology. The question is, how’s it going to be used? I can’t really give you a good idea of what the industry’s going to do because it seems As many different companies as there are, or as many different applications and theories and strategies in a very new and evolving technology. I can speak to how we intend to use it. And we intend to use it to improve the environment in which our agents work with Fortegra, whether that’s helping them build out a more sophisticated rating model, Whether that’s helping them with their bordero submissions and our ability to digest borderos much more efficiently and effectively without the traditional back and forth if there’s some sort of data errors, whether it’s first notice of loss enhancement strategies, it could be a myriad of things, but the primary focus is. How do we improve the transaction ecosystem in which our agents work with Fortegra to make their life a little bit easier, a little bit simpler, with the focus on freeing up time for them to spend finding high-quality risks, getting them priced and underwritten properly, and submit it to us? I’d much rather have them focused on underwriting. than administrative work. Administrative work does not add value for our shareholders, but high-quality underwriting does. So we’re applying AI to improve underwriting efficiency so that there’s more time to engage in their art and craft. 

Paul Lucas [00:08:22] Yeah, I think there’s a lot of people who will find that very, very reassuring indeed. And clearly, Rick, it’s an exciting time for the industry and of course Fortegra as well. Huge thanks for joining us today. Thanks to, of course, to you for watching. We’ll see you next time right here on Insurance Business TV.